Research reveals gender-bias in investment choices
New research suggests that women who run start-ups in the tech sector attract less investment due to gender bias among male investors.
The analysis of more than 18,000 start-ups by researchers at Caltech and UC San Diego found that Silicon Valley firms led by women faced tougher funding prospects than male counterparts.
That situation has led to fewer female tech entrepreneurs and – because those entrepreneurs often become venture capitalists – a smaller share of female investors who may have helped redress the balance.
"Women are treated differently than their male counterparts. They receive less interest and, in the end, less funding from male investors," says Michael Ewens, a Caltech professor of finance and entrepreneurship.
The study found that male-led firms were almost twice as likely to receive funding from male investors than those firms run by women.
Male tech entrepreneurs are also more likely to be recommended by male investors to other potential backers, and more likely to be asked to meet with a male investor.
The research considered company quality, sector focus, and risk aversion but were able to rule these out.
That left only taste-based discrimination which may include male investors wanting to support male-led start-ups for reasons ranging from outright sexism to a desire to mentor young entrepreneurs that remind them of themselves.
"There's no quick fix; however, if we continue to lower the barriers to becoming an investor, the pool of venture capitalists will begin to look more like the general population, and the gender gap will shrink," concludes Ewens.
The analysis of more than 18,000 start-ups by researchers at Caltech and UC San Diego found that Silicon Valley firms led by women faced tougher funding prospects than male counterparts.
That situation has led to fewer female tech entrepreneurs and – because those entrepreneurs often become venture capitalists – a smaller share of female investors who may have helped redress the balance.
"Women are treated differently than their male counterparts. They receive less interest and, in the end, less funding from male investors," says Michael Ewens, a Caltech professor of finance and entrepreneurship.
The study found that male-led firms were almost twice as likely to receive funding from male investors than those firms run by women.
Male tech entrepreneurs are also more likely to be recommended by male investors to other potential backers, and more likely to be asked to meet with a male investor.
The research considered company quality, sector focus, and risk aversion but were able to rule these out.
That left only taste-based discrimination which may include male investors wanting to support male-led start-ups for reasons ranging from outright sexism to a desire to mentor young entrepreneurs that remind them of themselves.
"There's no quick fix; however, if we continue to lower the barriers to becoming an investor, the pool of venture capitalists will begin to look more like the general population, and the gender gap will shrink," concludes Ewens.
